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The expanding reach of the OFCCP — are you a government contractor?

We're not a government contractor?! Or so you thought. Many employers are, in fact, government contractors because they have a federal contract or subcontract with the federal government, or participate in federally assisted construction projects (i.e., DOT funds given to states and then states issuing contracts to contractors). Being a government contractor requires compliance with the laws enforced by the Office of Federal Contract Compliance Programs (OFCCP), which prohibit discrimination based on race, color, religion, sex, national origin, disability, and veteran status and, in some cases, impose affirmative action obligations on contractors. Contractors also are subject to OFCCP audits and compliance evaluations.

The OFCCP has had its sights on increasing its jurisdiction for several years. Last week, a Department of Labor administrative law judge (ALJ) confirmed that OFCCP's jurisdiction includes many health care providers that previously were thought to be outside the OFCCP's purview. OFCCP v. Fla. Hosp. of Orlando (http://tinyurl.com/33gyugw). The ALJ ruled that the Florida Hospital of Orlando is a federal contractor because it entered into a contract with Humana Military Healthcare Services, Inc. (HMHS), a company that directly contracted with TRICARE, the Department of Defense's health care program for active duty and retired military and their families. Under the HMHS-TRICARE contract, HMHS provides networks of health care providers, including physicians, hospitals, skilled nursing facilities, and behavioral health professionals. Florida Hospital is one of those providers, receiving more than $100,000 annually for medical services. The HMHS-TRICARE contract did not refer to government contractor obligations for Florida Hospital.

Florida Hospital argued that it is not a federal contractor (or subcontractor) because it is simply a recipient of federal financial assistance, TRICARE does not consider providers under its network contracts to be subcontractors, and there were no federal subcontractor compliance provisions in its agreement with HMHS. The ALJ refuted each of these arguments, concluding that Florida Hospital was a contractor because it contracted to provide medical services directly to eligible recipients, TRICARE's position as to whether providers are contractors is irrelevant, and the equal employment opportunity clause was incorporated by operation of law and did not have to be specifically included in the contract. Although the opinion may be appealed before November 1, 2010, if affirmed, the decision supports OFCCP's position that it has jurisdiction over TRICARE health providers.

There are broad implications for this decision for TRICARE network providers. Principal among them is that providers should determine whether they must comply with government contractor requirements (http://www.dol.gov/ofccp/), which might include: developing an affirmative action plan under EO 11246, Section 503 of the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act of 1974; posting required notices; recordkeeping; performing compensation analyses; maintaining race, sex, and veterans data on hires, promotions, and terminations; filing contractor VETS-100A reports; and performing good-faith efforts to attract and maintain qualified minority, women, and military veterans.

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